8 ways to use merchandising data to boost your online store ROI

New year, new goals. Sounds positive, but looking at your sales data, your revenue and profit aren’t so hot. In fact, they’re much lower than you expected.

What can you realistically do right now?

How about harnessing the power of your ecommerce product merchandising data.

Your customer data is likely a gold mine of opportunities for improving your online store ROI. By effectively analyzing and applying this data, you can engage in smart decision making to better meet your online customers’ needs. By enhancing your marketing strategies and operations, you can get back to solidly hitting your growth targets.

Data considerations

Retail merchandising data encompasses all the information generated by your shoppers’ interactions in your online store or app: details like search queries, product views, cart additions, and purchases. By collecting and analyzing these data nuggets, you can gain vital insights on people’s individual customer preferences and buying patterns, plus discern market trends.

When it comes to utilizing your merchandising data, however, there are a few challenges. These include:

Poor data quality

Technical glitches, inconsistent data-entry practices, and outdated information can mean generation of lower-quality merchandising data that leads to inaccurate insights. For example, if your product-view data is not tracked correctly due to a website error, it might seem like certain items are unpopular, which could lead to your team making poor merchandising decisions. Regular data audits could help.

Privacy concerns

You’ve probably noticed that data privacy is a hot-button issue with consumers lately. Shoppers are increasingly suspicious about how their data is being collected and used. To maintain their trust, you can start by clearly disclosing which information you’re tracking and how you plan to use it. You can request explicit consent from your shoppers to use their data. Then, you can ensure that your data-collection methods comply with all laws and regulations. Noncompliance could result in hefty fines and damage your reputation. With all of these steps, you can solidify your customers’ trust.

Continuous change

The online retail landscape is dynamic, with shopper behavior and market trends continually evolving. That means it pays to incorporate a continuous learning approach in your merchandising strategies. It’s not enough to set up a strategy and forget about it; you need to regularly analyze any new data, identify emerging patterns, and adjust your operations as it makes sense. For instance, a sudden spike in searches for eco-friendly products could indicate a consumer shift toward valuing sustainability. By recognizing trends like this early, you can adjust your marketing strategies and inventory to maximize success.

8 ways to use merch data for better ROI

Ensure that your merchandising data is not just a collection of numbers but a driving force behind building a more profitable customer-centric online store. Here’s how:

1. Make data-driven merchandising decisions

Merchandising data gives you the scope to make data-driven decisions that impact your long-term growth. Your data can yield insights on which of your channels (such as social media, email, search engines) are most effective in reaching your audience, ensuring that your efforts get the best results.

Moreover, merchandising data can highlight the most opportune times to engage with your shoppers, such as specific days of the week or times of the day when they’re most active online. Being cognizant of timing can significantly impact the effectiveness of your campaigns.

data-driven merchandising banner

2. Improve your website architecture

Your website is your retail-space storefront: its functionality can profoundly impact how your shoppers interact with your content. How profoundly? One study found that 42% of shoppers would abandon their activity on a website if it had poor functionality.

How do you know when you need to take action to improve your design? Again, your merchandising data can offer some key insights.

For instance, if the data shows that shoppers often search for but can’t find certain SKUs, that suggests a need for a better organized layout or more-intuitive search functionality. Targeted improvements driven by data can give your website a customer experience that can’t help but drive higher sales.

3. Optimize product placement and inventory management

Merchandising data on product views, cart additions, and purchases can help you identify which items are most popular among your customers. This information will, for example, let you feature best sellers more prominently, such as on the home page or at the top of category pages, increasing the likelihood of sales.

This kind of optimization works for inventory management too; a data-driven approach helps more accurately forecast demand. Then you can make sure your high-demand items are available, preventing lost sales from out-of-stocks.

4. Build effective pricing strategies

Are your prices right? According to McKinsey, 30% of pricing decisions made by companies fail to be optimal, and you don’t want to have that problem. The good news is that your merchandising data can help you accurately inform your pricing strategies, ensuring that what you charge is competitive and profitable and that you can adapt to market demands in real time.

You can use your merchandising data to confidently clear out inventory and keep your stock fresh and relevant. You can also use it to compete in markets where price sensitivity is high and shoppers are looking for the best deals.

For products in higher demand, a slight increase in price could maximize your profit without significantly impacting your shopper demand. For products that don’t move as fast, a markdown could stimulate sales.

5. See and leverage trends

Using merchandising data to identify emerging trends can help you stay ahead in a dynamic market. By spotting where things are headed early, you can then adjust your inventory to include appropriate products and tailor your marketing campaigns to align with your shoppers’ interests.

Seasonal trends are another piece of the puzzle. Your internal data can reveal when certain products become popular, such as swimwear in summer, heaters in winter, and Black Friday picks in the fall. By analyzing this data, you can strategically plan your stock levels, providing enough of the right items during peak demand periods, as well as develop timely merchandising promotions to gain the most from the season.

6. Reduce cart abandonment

Why are your shoppers leaving your site or app before making a purchase? The Baymard Institute tells us that the average cart abandonment rate is 70%, so if you’re having this issue, you’re not alone.

Your merchandising data can, once again, play a vital role in combating this problem, improving your customer engagement and enhancing your ROI. Analyzing your data can uncover the reasons why your shoppers may purposefully be leaving empty handed — maybe they don’t like your high shipping costs, they see unexpected fees, or the checkout process takes too long.

If high shipping costs are a deterrent, for instance, you might consider offering free shipping on items costing more than a certain amount or providing clear, up-front disclosure about shipping charges. Or if a complicated check-out process is the issue, perhaps you can simplify it by reducing the number of steps.

7. Spot cross-selling and upselling opportunities

One of the best ways to increase average order value (AOV) is through cross-selling and upselling by making recommendations based on your merchandising data. In fact, a report from McKinsey notes that cross-selling can increase sales by 20%. Merchandising data can provide reliable insight on which products are frequently bought together, enabling you to suggest item pairings and complementary items. For example, if your merchandising data indicates that shoppers who buy cameras often want camera bags as well, then when they put a camera in their virtual cart, you can proactively suggest a bag.

8. Create personalized experiences

Your merchandising data can also help you tailor unique experiences for each and every visitor based on their preferences and behavior. So powerful is personalization in the retail industry that shoppers are more likely to purchase, recommend, and repurchase from companies that use it.

By incorporating AI to analyze browsing history and purchase patterns, you can deliver personalized product recommendations for items similar to what’s been viewed or bought. This might include suggesting accessories for a recently purchased item or calling their attention to products from categories they browse often.

You can use customized email marketing to take this a step further, sending tailored messages with product suggestions and special offers directly related to the customer’s purchase history. For example, if a shopper regularly buys Steelcase Blu-ray DVDs, your email can feature new releases of these.

Targeted promotions can be highly effective, too. By analyzing a shopper’s site interactions, such as items they’ve viewed or added to their wish lists but not yet bought, you can create special offers for these products. This approach can not only entice shoppers to complete purchases but make them feel understood and valued, possibly contributing to a higher retention rate.

Ready for better ROI?

By applying these data points on merchandising information, you can make better decisions, creating a more engaging user experience that translates to better KPIs.

Want to get started? We at Algolia help ecommerce companies boost their conversion rates through providing the powerful tool of great search and discovery. We can help you implement AI-powered recommendations to improve your customer satisfaction and meet your metrics expectations. Book a demo and let’s chat about turning your merchandising data into the kind of performance that could not only meet but wildly exceed your profit goals.

About the authorJohn Stewart

John Stewart

VP, Corporate Communications and Brand

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